The Weekly Scenario: Are There States That Still Have An Estate Or Inheritance Tax?
Question: Are there states that still have an estate or inheritance tax?
Answer: There are now 18 jurisdictions (17 states plus D.C.) with their own estate or inheritance tax. Compare that to 2001 where nearly every state had a “pick-up” estate tax that conformed to the federal credit for state death taxes. The phase out of the federal credit in 2001 caused the corresponding phase out of state estate taxes in states that conformed to the credit. Since that time, other states have eliminated their estate taxes, either altogether or simply by conforming them to the federal credit that no longer exists.
As examples, just recently, Delaware and New Jersey eliminated their estate tax. New Jersey still has an inheritance tax of up to 16% on transfers to sisters, brothers, daughters-in-law, sons-in-law and others, but it does not apply to transfers to spouses, parents, grandparents, descendants or charitable organizations. The District of Columbia modified legislation passed in 2015 to make its exemption equal to the federal exemption.
Comment: Even with no estate tax in two-thirds of the states, consideration of state taxes by estate planners in those states still remains important because people could move to a state with an estate tax or could merely own property in such a state. In addition, taxes in states where children and other beneficiaries might live could affect the design of long-term trusts.
As always, if you have any questions or would like to learn more, please contact Steve Shane at email@example.com or .
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
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